The Long Term Investor

Out and about right now. Markets are on fire. Without looking at my account I know that I have a BIG gain and everything is green.

How nice it is to be a big cap investor.

 

Sunshinegal......yes I got rid of TSLA. I also got rid of NKE and HON. I now own HD, COST, MSFT, AMZN, NVDA, AAPL, and GOOGL.

AND.....as a result I had a BIG day today. ALL in the green and a big beat on the SP500 by 1.03%.

YES.....you need to read up on NVIDIA. They have been kicking ass in the tech space for the past 2-3 years when they hit their stride with their chips and the AI movement.

 

The averages in review:

DOW year to date (-3.70%)
DOW five days (-1.05%)

SP500 year to date +1.47%
SP500 five days +1.25%

NASDAQ 100 year to date +2.90%
NASDAQ 100 five days +2.86%

NASDAQ year to date +2.00%
NASDAQ five days +2.26%

RUSSELL year to date (-4.08%)
RUSSELL five days (-0.57%)

BIG CAP TECH is leading the markets higher. Year to date I am NOW at......+6.9%. A week ago I was at.....+3.27%. A BANNER WEEK for me and the markets. I would like to quickly get up to a gain of 10% or more so I have some cushion to weather the inevitable correction. Yes......corrections are a normal part of any market year.

 

AMAZINGLY with this run-up......the shares of AMAZON that I bought in my kids account on January 16.....are now up by +1.5%. The wonders of NOT doing market timing or entry points.

 

Hey Sunshinegal......you need to hang out more often. Every three years is a little long. We would like to have your company on here more regularly. Are you from the old YMAM board? I think so......right?

For context....I used to post on the YMAM board which was a successor to the old Microsoft Money boards where I used to post for a long time.....going back to the early 1990's. I left YMAM and came here when the board evolved from investing to a WOKE LADIES hang out board, with little to no investing content. Nothing wrong with that.....boards evolve over time. BUT....it was time for me to move on.

 

Talk about being.....snake-bit. Poor Boeing.

Boeing 747 cargo plane suffers fiery engine failure, makes emergency landing in Miami

https://www.oregonlive.com/nation/2...failure-makes-emergency-landing-in-miami.html

Probably a pretty old plane.....but....a bad headline for Boeing.

 

For those just starting to get up to speed with NVIDIA.

Nvidia stock hits all-time high as AI craze rolls on

https://finance.yahoo.com/news/nvidia-stock-hits-all-time-high-as-ai-craze-rolls-on-183354730.html

If it was me and I did not already own this stock.....I would probably bite the bullet and buy now. There is still a HUGE amount of growth to come in AI and for NVDA. BUT...that is me.....I dont do entry points and I follow the research that shows buying all in all at once beats market timing.

AND....bigger BUT.....I am probably more aggressive than most people and have a total long term focus.

 

The AMAZING market week and close today.

Stock market today: Dow, S&P 500 hit record highs as tech stocks soar

https://finance.yahoo.com/news/stoc...cord-highs-as-tech-stocks-soar-192209321.html

(BOLD is my opinion OR what I consider important content)

"Stocks climbed on Friday, pushing the S&P 500 and Dow Jones Industrial Average to record closing highs.

The S&P 500 (^GSPC) rose 1.2% to close at 4,839. This marked the S&P 500's first record close since January 2022. The Dow (^DJI) gained just over 1% to settle at 37,863.

On a percentage basis, the tech-heavy Nasdaq Composite (^IXIC) was the day's biggest winner, rising 1.7% to close at 15,310. The Nasdaq's record close stands at 16,057, reached in November 2021.

Investor focus this week turned back to Big Tech stocks pushing markets to new heights as the late 2023 rally waned.

Strong retail sales data and an upbeat reading on consumer sentiment saw investors push out expectations for the Federal Reserve's first interest rate cut to May from March. Still, optimism that the fundamental driver of last year's rally in Big Tech — investment in AI — would continue powered the sector higher and helped lift the major indexes to record levels.

And as Truist's co-CIO told Yahoo Finance this week, the math linking the "Magnificent Seven" to the fortunes of the overall market is simple — with these names holding a roughly 30% weight in the S&P 500, as Big Tech goes, so goes the market."

MY COMMENT

YEP that is how it all ended today. NO.....I do NOT agree in the slightest that the market "waned" in late 2023. We were in BIG TIME BULL MARKET mode through the fall and into late December. BULL MARKETS do not just shoot straight up.....at times they pause to consolidate the gains. That is what we saw in the last week of December. The next week and a half to start 2024 was driven by portfolio re-balancing and taking of profits.

 

HAVE A GREAT WEEKEND EVERYONE. CELEBRATE YOUR GAINS. YOU DESERVE IT.

 

I got my COSTCO special dividend last Friday. For Schwab account holders.......it does not automatically reinvest. At least mine did not. You have to manually put in a trade for those funds.

 

I like this little article.

This record-breaking market just keeps going higher and higher. Here’s why

https://www.cnbc.com/2024/01/19/thi...-keeps-going-higher-and-higher-heres-why.html

(BOLD is my opinion OR what I consider important content)

"Key Points

• As it has digested the various headwinds and tail winds, the market is pushing toward a record closing high.
• Economic data outside of manufacturing and housing has been mostly solid, particularly where it concerns the seemingly unbreakable labor market.
• Combining a tough economy with a more accommodating Fed and an outperforming tech sector is adding up to a winning formula.

The stock market keeps scaling new heights as investors focus on the good and ignore the bad, no matter how bad the bad parts might look sometimes.

Prospects for a slowing economy, geopolitical unrest and turmoil in Washington aren’t scaring market participants largely because none of those threats have turned into much in reality.

What instead has taken center stage is an economy performing remarkably well, inflation pulling back and a run of positive developments in Big Tech that has outweighed any what-ifs that the market has had to endure.

“If investors are looking for a reason to be negative, it’s hard to find,” said Mitchell Goldberg, president of ClientFirst Strategy, a financial advisory firm. “The 24-hour news cycle is so intense. But the fact is, a lot of it is noise and a lot of it has nothing to do with economics and personal finance. There’s so much information overload now. But to break it down and put perspective on things, what’s not to like about the stats that are coming up?”

As it has digested the various headwinds and tail winds, the market is pushing toward a record closing high. In fact, the S&P 500 breached its intraday peak Friday, continuing the momentum built through the end of 2023.

Large technology players have led the charge. Juniper Networks, Nvidia and Advanced Micro Devices are the three biggest sector gainers this year on the S&P 500, buoyed in part by enthusiasm over generative artificial intelligence technology.

Solid economy provides a boost

At the same time, economic data outside of manufacturing and housing has been mostly solid, particularly where it concerns the seemingly unbreakable labor market. With expectations running high that elevated interest rates pose a threat to continued hiring growth, initial jobless claims last week hit their lowest level since September 2022.

Along with commentary from multiple Fed officials, the tight labor market has taken some of the steam of out the market’s anticipation for rate cuts this year.

Where the market a week ago was nearly certain the Fed would start cutting in March and keep going with six more quarter percentage point moves this year, pricing shifted Friday. Traders in the fed funds futures market now think there’s less than a 50% chance of a March cut and now see a greater likelihood of five reductions this year, according to CME Group data.

But markets stayed positive even with the dimmed outlook for policy easing.

“As far as the Fed raising rates, this has been borne out that as long as the rate hikes don’t cause something to break” the market is fine, Goldberg said. “I don’t really see anything breaking. There’s no subprime debt crisis, I don’t see a mortgage crisis. ... There have been a lot of big, bold predictions, and one by one they don’t happen, or they just push them out to the next year.”

Withstanding rate hikes

Indeed, the market has behaved well since the Fed started hiking rates — 11 times worth 5.25 percentage points in the most aggressive cycle going back to the early 1980s. Since the first increase on March 17, 2022, the S&P 500 has gained more than 8%. Since the last hike on July 27, 2023, the large-cap index has risen more than 5.5%.

Now the market is anticipating, with perhaps a little less fervor, that the Fed is going to start cutting.

Investors are “bullishly skating to where the puck is going,” meaning a lower fed funds rate, Bank of America investment strategist Michael Hartnett said in a client note Thursday.

Combining a tough economy with a more accommodating Fed and an outperforming tech sector is adding up to a winning formula.

“The big seven names [in tech] have become like a chimera. They appeal to two very different economic backdrops,” said Quincy Krosby, chief global strategist at LPL Financial. “One is we’re out of fear that the economy is slowing dramatically. The other is they’re specific catalysts for AI because the market has been focused on the business development with mega-tech and business innovation for generative AI. And now what you’re seeing and what companies are reporting is the monetization of that.”

Krosby specifically cited standout earnings from Taiwan Semiconductor as a bellwether for the sector and the promise that disruptive technology holds. “That is something that the market has been waiting for,” she said.

Then there’s the economy.

With the labor market withstanding inflationary pressures and higher rates, that opens the door for more consumer strength this year. Consumer sentiment hit its most optimistic level since July 2021, according to a University of Michigan survey released Friday.

“You’re always looking for your first signals towards for a recession. They come right out of the labor market. What you see is that the underpinnings of the economy helps maintain consumer spending, which is 70% of the economy,” Krosby said. “That’s a backdrop that the market appreciates.”"

MY COMMENT

DUH....the markets prefer and like good economic news over government BS. In fact the vast majority of economic news lately has been positive.

What is not mentioned here is.......yes.....EARNINGS. They have been very positive for what.....at least 10-12 quarters now. And...this time is no different....they will beat expectations.

HERE is the guts of this article:

“The 24-hour news cycle is so intense. But the fact is, a lot of it is noise and a lot of it has nothing to do with economics and personal finance. There’s so much information overload now. But to break it down and put perspective on things, what’s not to like about the stats that are coming up?”

 

I believe this story reflects a coming BOOM for existing home owners. As rates come down we are going to see mortgage rates approaching 6% and, if the come down enough, perhaps going into the 5% range. There is a HUGE amount of demand in the housing market that is like a pressure cooker.....due to distortions in the market.....primarily lack of inventory. When it all lets go due to normalization......I believe buyers are still going to outstrip inventory and we will see a booming market.

Existing home sales sank to slowest pace in 30 years in 2023
Even with slower sales activity, median home prices continue to climb.

https://finance.yahoo.com/news/exis...owest-pace-in-30-years-in-2023-162424891.html

(BOLD is my opinion OR what I consider important content)

Sales of previously occupied US homes slumped to the worst level in decades last year, as elevated rates and rising home prices deadlocked affordability.

Year-over-year sales of previously owned homes declined by 6% and came in weaker than predicted by economists polled by Bloomberg.

Existing home sales fell 1% last month from November to a seasonally adjusted annual rate of 3.7 million, the National Association of Realtors said Friday. That marked the lowest sales activity since August 2010, when 3.68 million sales were recorded.

The median home price jumped more than 4% year over year, marking the sixth straight month of annual gains. The median price of $382,600 was the highest for the month of December on record.

The data reflects how tough it was for first-time homebuyers to break into the market last year, as they dealt with a trifecta of challenges to affordability: tight inventory, climbing prices, and elevated mortgage rates.

With demand still high, that pool of buyers may continue to have a hard time in 2024.

"We can’t blame high mortgage rates for the deficit in transactions last year. In reality, demand for housing — and homeownership, in particular — has remained high, despite higher rates," Bright MLS chief economist Lisa Sturtevant said in a statement. "Prospective homebuyers have been shut out of the market by a lack of inventory. If there had been more listings on the market in 2023, we would have had more home sales."

Potential first-time buyers struggle to break in
On an annual basis, existing home sales fell to 4.09 million — the lowest level in 30 years — and were 19% lower than in 2022.

However, homebuying conditions weren’t as bad back in the 1990s compared to today’s market, the NAR said. Throughout the 1990s home sales were running at around 3.5 million, with sales hitting a mark of 3.8 million in 1995. Back then there were also roughly 266 million Americans in the US; today that figure has risen to 335 million.

In other words, there was still room for inventory growth in the 90s.

"Home sales would only hit 5 million in 1999 — that’s a reflection on sales and prices. Just like the price of movie tickets were much lower back then," Lawrence Yun, chief economist at NAR, said in a press conference.

The median sales price for a home in 1995 was $114,600, the NAR said. While people’s incomes were lower, home prices were much more affordable. By contrast, the median price for a home reached a record high of $389,800 in 2023.

In the '90s, the share of first-time buyers purchasing a home was also much closer to historic norms at 42% of the market. In 2023, the pool of first-time buyers averaged under 30%. Folks purchasing decades ago were also much younger, with the median age of a buyer in the 90s at 31, compared to 35-year olds today.

"It was a better market at the time period for first-time homebuyers — the market being more affordable," Jessica Lautz, deputy chief economist at NAR, said in a press call.

Some of that struggle among entry-level buyers was reflected in the latest transaction data.

For instance, sales of more affordable homes priced under $100,000 were down 18% in December 2023. Homes priced between $100,000 and $250,000 also registered a decline of 17%, the NAR found.

Meanwhile, sales of homes priced from $250,000 to the half-million-dollar price point were down 7%, while sales of homes priced above $1 million were up 14%.

"Generally the lower price point's lack of inventory is holding back sales, while on the upper end inventories are showing up more compared to the year before," Yun said. "First-time buyers really struggle in getting into the market."

Sellers hold firm on prices
The shortage of inventory also continued to add pressure on home prices. All four regions of the country recorded year-over-year declines in resale activity in December, the NAR found.

In the Midwest, home sales came in at an annual rate of 900,000 last month, but remained nearly 10% lower than a year prior. The median price in the Midwest was $275,600, up 6% annually.

In the West, sales declined almost 8% from a month ago to an annualized rate of 690,000 in December. The median price in the West was $582,000, up almost 5% from last year at this time.

Sales in the South fell 2.8% from November to an annual rate of 1.72 million in December, down 4.4% from a year ago. The median price in the South was $352,100, a year-over-year increase of 3.8%.

As for the Northeast, sales were unchanged from November but were down 10% from a year earlier.The median price in the Northeast was $428,100 — nearly 10% higher than a year ago.

"Sellers are holding firm on prices," Nicole Bachaud, Zillow senior economist, previously told Yahoo Finance. "Likely thanks to the slower paces of price growth helping sellers (and buyers) know what to expect when it comes to setting a price."

Some of those prices may ease however, as more inventory weaves its way into the market. According to separate data from Zillow, new listings ticked up in January but remained 14.5% below prepandemic levels.

"There is evidence that the ‘mortgage rate lock’ is losing its grip on sellers," Bachaud said. "Though the flow of new listings remains below prepandemic levels, they are trending closer to prepandemic norms. This could help boost inventory and provide a cushion for buyer demand."

Demand-supply imbalance will carry into 2024
The share of unsold existing homes at the end of December was 1 million units, up almost 12% compared to a month ago, NAR data showed. Overall, there was a 3.2-month supply of unsold inventory at the current sales pace. At least six months of inventory is considered a healthy market.

"Listings of existing homes will continue to remain low as current homeowners, many holding sub-3% mortgage rates, will be reluctant to move," Sturtevant said.

Despite the still-tight inventory of previously owned homes on the market, demand continued to pick up as lower rates lured some buyers and sellers back. Mortgage rates in December sank to an average 6.61%, hitting its lowest level in six months since May 2023.

According to the NAR, that put the typical monthly mortgage payment for a $400,000 home at $2,046. Rates haven’t budged much since, just this week rates were back to 6.60% — representing a monthly savings of roughly $257 compared to when rates reached a high point in October 2023. The historical norm for mortgage interest rates since 1971 is 7.74%.

"More and more buyers and sellers are accepting that rates in the mid- to upper-6’s maybe aren't so bad as we settle into the new norms of the market," Bachaud noted.

Homes sold last month remained on the market for an average 29 days, up from 25 days in November and 23 days in October. At least 56% of homes sold in December were on the market for less than a month.

First-time buyers made up 32% of sales in December, up from 31% in November and 28% in October 2023. Individual investors or second-home buyers — which make up most cash sales — purchased just 29% of homes last month, up from 18% in November, and up from 15% in October.

"As we move into 2024, there will be some existing homeowners who find that changing family or financial circumstances will compel them to sell, which should bring some additional options to buyers," Sturtevant said. "Overall, however, there will still be a demand-supply imbalance in the housing market well into 2024.""

MY COMMENT

In my little area of 4200 homes we currently have.....ONLY..... about 20 homes for sale. There are a lot that are PENDING.

As to the market in general....it is very distorted both in reality and in expectations. Buyers need to wake up and realize that rates are NOT going back into the 2-4% range. These rates were extremely abnormal. The normal mortgage range is about 5.5% to 7%.

As rate cuts happen mortgage rates will come down into the low 6% range and perhaps into the high 5% range. With our population continuing to grow and home ownership STILL being a huge goal for most people and considering the BIG numbers of people in GenZ and the Millennial generations......we are all set up for a BOOM in property prices when the rates attract buyers to flood back into the market.

In other words.....supply and demand will continue to be distorted in the REAL PROPERTY markets....in favor of sellers. I believe we will see one more....massive price surge with multiple offers the norm.....before it all falls back to a normal market at some time in the future......2-4 years down the road.

For people that own a home......it could be a GOLDEN ERA of net worth growth......if....they can keep from using their home as a piggy bank. Emphasis on the word....."COULD".

 

Well said above Smokie.

In the end when you have been investing for 40 years or more......you have probably experienced everything there is. BUT....experiencing something in the past......does not mean that you learned anything or that you can control your human emotions.

The greatest lesson any investor can learn is the POWER OF LONG TERM INVESTING. A lot of people think they have learned that lesson.....but they have still never learned that you have to be in the markets to get those gains and benefits. They give in to fear and greed.....the twin return killers. AND....as a result.....they jump in and out or market time or make irrational and crazy gambles.

No matter how much experience you have there is NO CURE for irrational behavior as an investor.

In the past I did a lot of reading of the academic research on investing behavior and what has been PROVEN to work. The reality of what actually is proven to work is often at odds with the common thinking. In the end I became an investor that tries to TOTALLY focus and base my investing on.....PROBABILITY. That means FUNDAMENTAL and LONG TERM investing behavior.

it is really very simple.....but....humans have a big problem doing anything....simple.